Samsung's net profit for second quarter down 8%

SEOUL • South Korean giant Samsung Electronics reported an 8 per cent fall in its second-quarter net profit yesterday and promised "flexible" pricing of its new flagship smartphone after less-than-stellar sales contributed to a slide in its mobile unit's earnings.

The world's largest smartphone maker said net profit for the April-June period stood at 5.75 trillion won (S$6.73 billion), down from 6.25 trillion won a year ago and slightly below analyst estimates.

The conglomerate has now seen its net profit decline for five straight quarters year-on-year, mainly due to heightened competition in an increasingly saturated smartphone market that it had dominated for years.

Yesterday, it signalled price cuts for its high-end Galaxy S6 smartphones to combat a market slowdown and surging sales of Apple's iPhones and a challenge from Chinese firms such as Xiaomi.

Operating profit also shrank 4.03 per cent from a year ago to 6.9 trillion won, while sales dropped 7.3 per cent to 48.5 trillion won.

PRICE FLEXIBILITY

"We will strive to maintain solid sales of high-end smartphones by flexibly adjusting S6 and Edge prices depending on marketing circumstances, while also launching new large-display models."

MR PARK JIN-YOUNG, vice-head of communications at Samsung's mobile division

Hopes of a turnaround had largely been pinned on the sixth edition of its flagship smartphone launched in April.

The Galaxy S6 and S6 Edge with a wraparound screen received rave reviews, but company predictions of record sales fell short of expectations, partly due to production and supply constraints.

Operating profit in the mobile division was down 38 per cent year-on-year in the second quarter at 2.76 trillion won.

The company yesterday also announced a mid-year dividend of 1,000 won a share, or 148.9 trillion won in total, compared with 500 won in the previous year.

But it did not stop investors from dumping Samsung shares in the Seoul stock market, where the firm's shares dropped 3.8 per cent to close at 1.21 million won.

"We will strive to maintain solid sales of high-end smartphones by flexibly adjusting S6 and Edge prices depending on marketing circumstances, while also launching new large-display models," said Mr Park Jin-Young, vice-head of communications at Samsung's mobile division.

Despite slowing sales, Samsung remained the world's top smartphone vendor in the second quarter with a global market share of 21.7 per cent, according to a quarterly survey by research firm IDC.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 31, 2015, with the headline 'Samsung's net profit for second quarter down 8%'. Print Edition | Subscribe